The California Revenue & Budget Problem

At CCRC, we believe we are all in this together. We have all been affected by California’s budget crisis whether by our children’s elementary school which can no longer take field trips or libraries closing down or huge potholes endangering the roads or public offices limiting their hours.

California has had a revenue and budget problem for years. But this year, the deficit is almost at 16 billion dollars!

The safety net is feeling less and less safe and yet there are still those who claim we need to make more cuts. This cutting and cutting is what took California from being the Golden State to state of crisis it’s in now. And now is the moment to address the root causes of the revenue and budget crisis so that we can again offer a public education that is amongst the best in the nation and set trends for innovation and progress.

Root Causes of California budget crisis

California used to be the only state in the United States that had two super-majority rules. We required a 2/3 vote in the legislature to pass a budget and a 2/3 vote to raise revenues both at the state and local level. These two rules together wreaked havoc in California for too long. Fortunately, in 2010, Californians passed Proposition 25, which relieved the legislature a bit by making it possible to pass a budget with a majority of our elected leaders.

This 2/3 rule to raise revenue was written into Proposition 13, passed in 1978, which also created vast property tax loopholes for California’s largest corporate property owners. This dramatically reduced California’s revenue. Corporations who have not sold or built up their property since 1978 are essentially paying taxes on their property as if we are still in the year 1975. This HUGE tax loophole is costing the state billions of dollars a year.